Liberty Health Sciences, a vertically integrated medical marijuana company with operations in Florida, announced in a Nov. 19 press release that it has reached an agreement to settle a class-action suit. The “memorandum of understanding [is] regarding settlement of the securities class action that was commenced against it in the United States in 2019,” the release states.
The settlement figure is $1.8 million US, according to the release, which states: “The settlement is made without any admission or finding of liability and is subject to court approval. There is no assurance that the settlement agreement will receive court approval.”
An attorney representing Liberty wrote in a letter to the judge, overseeing the case in the U.S. District Court for New York’s Southern District, that “Plaintiffs anticipate filing a motion for preliminary settlement approval by January 8, 2021.”
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Investors alleged in their January 2019 complaint that Liberty violated securities law. They claimed that Liberty, headquartered in Toronto, Ontario, Canada, “has had longstanding ties” with Aphria, another Canadian cannabis company. Of the “Class Period” between June 28, 2018, and Dec. 3, 2018, the complaint states:
“Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Liberty, in conjunction with Aphria, was involved in a scheme whereby numerous fraudulent acquisitions and transactions were made to provide undue benefits to both companies’ insiders; and (ii) as a result, Liberty’s public statements were materially false and misleading at all relevant times.”
Aphria announced that it sold off its Liberty stake in September 2018, according to the complaint. Then, Quintessential Capital Management and Hindenburg Research published the report “Aphria: A Shell Game with a Cannabis Business on the Side,” alleging a scheme by Aphria to acquire shell companies and sell them off at, as the legal complaint states, “artificially inflated prices.”
“On this news, Liberty’s stock fell $0.36, or nearly 34%, over the next two trading days to close at $0.70 on December 4, 2018,” the complaint stated.
Numerous investors joined the suit against Liberty, according to the complaint. “The members of the Class are so numerous that joinder of all members is impracticable,” it reads.
Proceeding court filings, including amended complaints from Liberty’s attorneys, continued to set forth these allegations and highlight the large numbers of people who allegedly lost money in 2018 because of this “scheme.”
Liberty has dispensary and delivery operations across Florida and also cultivates and processes cannabis, according to its website and the legal complaint. Liberty plans to expand its manufacturing and processing facility, located on a 387-acre parcel of land in Florida, to 490,000 square feet of cultivation space, according to a press release.